Working 3 Month Per Year - Taxed For A Full Year

[inventorinthailand]

Hi

If an employee (Farang) only works for us for let say 6 month and makes about 200 000baht per month, our economy personnel says that we have to deduct a monthly tax as it was a yearly income at 2.4 million baht when he in fact will only make 1.2 million this year.

Any one here who knows what the correct way is to calculate the monthly tax for this guy and other "short season" employees?

Peter

[singa-traz]

Not sure there is any other way to calculate the tax, but they will be able to get a refund on the excess tax paid.

[Soutpeel]

Not sure there is any other way to calculate the tax, but they will be able to get a refund on the excess tax paid.

Agreed, you will get a tax rebate, if you have paid too much

[CWMcMurray]

I agree with the others... you should withhold based upon estimated yearly salary (12 x monthly salary), even if you do not plan on employing him for the entire year. At the end of the year he can apply for a refund if needed.

If you think about it , it does make sense to do it this way... the presumption would be that he would find another job making a similar salary after leaving your company. So even if the law would allow you to deduct less (not sure if it does), you wouldn't be doing him any favors by deducting less... he may just end up owing a whole lot of taxes at the end of the year.

[kudroz]

Hi

If an employee (Farang) only works for us for let say 6 month and makes about 200 000baht per month, our economy personnel says that we have to deduct a monthly tax as it was a yearly income at 2.4 million baht when he in fact will only make 1.2 million this year.

Any one here who knows what the correct way is to calculate the monthly tax for this guy and other "short season" employees?

Peter

Yes that is correct and that is how we are doing it too. If too much tax has been paid, your employee will be eligible for a tax return next year.

[inventorinthailand]

Thanks guys for your answers. Back in my own country sweden, i can apply for a reduced tax if i plan to work less then a full year. Is sweden unique in this matter? This guy just arrived to thailand and will only work here for 6 month and then go back to sweden. And even if he does not return back, he will anyway not make more then 1.2M this year.

Edited June 8, 2009 by inventorinthailand

[CWMcMurray]

I do not think he can...

I believe the Thai government would be foolish if they allowed a foreigner to do this. They would then need to monitor to ensure that he did not work over the 6 months and if he did then they would need to try and find a way to get the back taxes from his previous job before he left the country.

This would be a mess... either foreigners would need to get a release from the tax agency before being allowed to leave or you would get a lot of foreigners trying to skip out on their tax obligations.

It makes a lot more sense to put the burden on the worker to monitor his own taxes and file for refund if he over paid.

[khonthaireuplao]

Section 50(1) of the Revenue Code and Revenue Department Instruction No.Paw 96/2543 apply in this situation.

If you were to start work in July for example, then tax is withheld based on you having income from July until the end of the tax year i.e. for 6 months of the tax year. If you are still employed in the month of December, the employer will normally calculate the tax withheld in that month so that the tax withheld for the whole tax year will be equal to the actual tax payable on the return (assuming no other income or deductions).